An extremist, not a fanatic

February 26, 2014

On happiness inequality

Do we need policies to reduce inequality, or should we simply allow economic growth to do so? This is the question posed by a recent paper by Andrew Clark and colleagues. They find that, in the UK and elsewhere, economic growth reduces inequality of happiness.

This isn't simply because it reduces the amount of abject misery. Growth also reduces the number of people who say they are very happy. This might be because wealth increases our options and hence the opportunity cost of our preferred choice. For example, work isn't too bad if it gets you out of a joyless slum, but it can be a misery if it keeps you off the golf course or guitar.

This finding is awkward for the left. If we believe that what matters most is people's well-being, it suggests that the most important inequality should be addressed not by redistribution by simply by promoting growth.

So, what answers might the left have to this? I can think of three:

1. Policies to promote growth require redistribution, to the extent that wealth inequalities are an obstacle to growth. This is the thinking behind wage-led growth and the asset redistribution ideas of Sam Bowles.

2. If people adapt their desires to their circumstances, or if other cognitives biases reconcile them to inequality, they might be content with injustice, but this would not necessarily legitimate the system: we would consider slavery wrong even if all slaves were content. As Amartya Sen said:

Consider a very deprived person who is poor, exploited, overworked, and ill, but who has been made satisfied with his lot by social conditioning (through,say, religion, or political propaganda, or cultural pressure).Can we possibly believe that he is doing well just because he is happy and satisfied? (The Standard of Living (pdf), p12)

3. Inequality can matter for non-welfarist reasons - for example to the extent that it undermines equality of respect or the democratic system.

Personally, I think these are good answers. But Clark's paper should force leftists to think more about why inequality matters.

Comments

Consider a very deprived person who is poor, exploited, overworked, and ill, but who has been made satisfied with his lot by social conditioning (through,say, religion, or political propaganda, or cultural pressure).Can we possibly believe that he is doing well just because he is happy and satisfied? (The Standard of Living (pdf), p12)

Does it matter which stage of economic development a country is in? For an already rich country, re-distribution would make more sense. For a country like India, growth policies may make more sense because there isn't much wealth to re-distribute in the first place. The middle classes in these emerging countries prefer growth policies to re-distribution. They'd rather help the poor directly through charity than do it via re-distribution as they know the politicians will pocket most of their taxes.

1. Taken at face value, this argument is already much weaker than ontological arguments for redistribution, e.g., those that stem from a redistributive justice framework. If redressing inequality is justified only inasmuch the latter hampers growth, determining the right amount of redistribution becomes an empirical question. There are strong arguments in favor of some inequality as well.

2. I guess that if you believe in false consiousness, this argument goes without saying. For the rest of us, it seems that most if not all of these issues can be address with procedural justice. Slaves in the past, and blacks today, are not exploited by ruthless monopolists, but because many laws are openly or hiddenly discriminatory (e.g., criminalizing crack possession more harshly than cocaine, voters right), and because they don't have access to adequate defense.

3. is in the realm of unsubstantiated opinion. There is little evidence that respect correlates with inequality. Denmark and Singapore have a great deal of wealth inequality, and both strike me as enforcing a great deal of reciprocal respect as well. Within-county, NYC is comparable in size to Denmark and Singapore, and is vastly more unequal than the rest of the state. I don't detect any worsening in respect levels (outside of the subway, of course). As for inequality undermining democracy, suit yourself if you consider Bartels or Hacker-Pierson methodologically sound. Upon close reading I think they are not.

There is a further consideration, which is the impact of inequality on health. Thus, if you support the conclusions of Richard Wilkinson (The Spirit Level) and Michael Marmot (The Status Syndrome) then inequality is a factor that promotes poor health across society as a whole. The more equal societes (such as Japan, the Scandinavian countries for example) have greater life expectancy, in part due to greater equality and social cohesion. A measure of overall wellbeing would, we presume, be not merely how subjectively happy someone happens to be, but also their life expectancy and quality of health (mental and physical).

If we assume for a moment that the paper represents the word of god himself and is an absolute truth, it still doesn't relate to the first question. There is a database of research that suggests reducing actual inequality increases the well being indexes of a society.

One obvious problem is conflating happiness with well-being. You can be well and cranky, angry, or annoyed. Also, note that the increased homogeneity in the measurement comes from losses at both ends.

"Growth" in an of itself means nothing - a tumor is 'growth' in biologic mass - that doesn't make it an addition to the well-being of an organism. You really can't separate issues of growth and distribution, as they are organically linked.